The Lifecycle of a Cryptocurrency – Part 3

Introduction to a Marketplace

The introduction of a coin to a marketplace is a very significant milestone in the lifecycle of a coin. While the vision of the developers and reaction of early adopters are important, the performance of the coin on the marketplace shows its real potential and value in the eyes of the general public and unbiased investors. If the coin is doing well, during the first few months of the coin on the market its trading volume will be increasing. The price is likely to fluctuate wildly, but the interest, volume, and community should be growing.

Another important indicator of how the coin is doing is its original announcement thread at BitcoinTalk.org. It is easy to see how the activity and popularity of a particular forum thread by simply checking how many pages and posts it has and when users posted the first and the last message. The number of pages shows you how active the community behind the coin is. The last few pages of a thread should consist of the interactions between the community and members of the team for larger coins and developers answering questions for smaller coins. Make sure that the posts are recent and you are not reading an old thread, even though an old thread can be a good lesson about what happens with successful and unsuccessful coins. An ideal coin is a coin that is at least six months old, has a very active community and is still going strong. Six months is a point that many new coins, especially pump and dump coins, are never going to get to.

Finally, around this time the coin and the software should be getting some major updates. While it is too early for all the features that developers promised in their whitepaper to come to life at once, there should be definite movement in the promised direction. This is also the point where developers are likely to update or revisit the whitepaper and issue a new version that more precisely reflects the realities of what has been happening with the coin. This is absolutely fine as long as the features that developers promised get adjustments and tweaks and aren’t eliminated altogether.

If the developers are delivering on the features and promises and the community is increasing in size, it is likely that the coin is going to have a good future ahead of it.

 

From Six Months to Eighteen Months

The next important milestone for a coin is the eighteen months point. One of the main reasons why most coins don’t get to this point is the lack of financing. Between six and eighteen months, a coin still needs a lot of fiat funds because the developers need to hire marketers, public relations experts, graphic designers, and coders to keep the project going. Most of the coins solve this issue in one of two ways.

The first way is to collect membership fees and to gather donations for specific features and projects that community deems necessary.

The second way is to openly pre-mine some coins and sell them once trading begins on an exchange.

Both of these ways suffer from the same issue but approach it from the completely different ends. The issue is that they depend entirely on one strategy. With the first way, the strategy is to generate the goodwill in the community. With the second way, the implementation has a lot of risks for fraud.

Only a few coins were able to come up with other ways to keep funding going. If you notice a coin with an innovative approach to fundraising, keep an eye on it to see what and how the developers are going to do and what happens to the coin.

 

Getting the Word Out

As a coin gets more and more popular, there will be more and more people willing to talk about it and discuss it on their social media simply because they believe in the coin. If you see a hashtag with the name of the coin becoming popular and users with long-term established reputations supporting the coin, it is a very good sign that the developers are being successful in nurturing the community behind the coin. This is similar to politicians developing grassroots movement on the ground even when they don’t have a lot of funds or corporate support.

 

Growing Transaction Volume

As a community around a coin grows, so should the transaction volume, even though just like the price of the coin, transaction volume can be very volatile.

Add a Comment